Construction firms lose £1.8 billion in invoice fraud
According toresearch published byTungsten, this amounts to...
UK construction businesses lose more than £1.8 billion from invoice fraud every year.
According to research published by Tungsten, this amounts to £1,948 per construction business. One in six affected firms believe the fraud has cost them more than £5,000 in the last year alone.
Concern about the scale of the fraud is greater in construction than any other sector, with a staggering 71 percent of business owners troubled by its increase, compared to a national average of 54 percent. It is viewed as the single biggest threat facing businesses, moreso than losing a major contract, an employee, or competitor activities.
Of the construction companies surveyed, 60 percent have received a fraudulent or suspicious invoice in the last year – this is significantly more than any other sector and the national average of 47 percent. Tactics have included viruses embedded in attachments; unknown invoices attached to an email or sent by post; false changes to bank details; and sending duplicate invoices.
Tungsten’s research exposes the need to crack down on fraud in the UK and is backed up by the Government, which in February launched a new taskforce to combat fraud of all types. The Joint Fraud Taskforce will consist of representatives from the City of London Police, National Crime Agency, Financial Fraud Action UK, the Bank of England, and chief executives of the major banks. While focused on consumer fraud, its launch shows the scale and seriousness of the situation and the Government’s desire to identify and remove weak links in the UK’s financial systems and processes.
Not every company is aware of the high stakes, however – 11 percent of construction businesses would take no action if they received a suspicious invoice and six percent wouldn’t know what to do. Only around half (54 percent) would contact the police or a reporting service like Action Fraud, showing that there is still an education job to do in terms of knowing how to handle cyber-crime.
Richard Hurwitz, CEO at Tungsten, said: “Construction firms face all manner of challenges, and it’s telling that cyber crime looms as one of the biggest. It seems particularly prevalent within the construction industry possibly because many contractors have minimal back office support and therefore it is easier for fraudsters to get away with their tactics. What’s most troubling is that it needn’t be like this as there are steps companies can take to protect themselves.
“Technology such as electronic invoicing can help construction companies battle invoice fraud as only confirmed suppliers can upload their invoices and then these are validated before they are paid, potentially saving firms thousands of pounds. Tungsten currently handles more than 15 million invoices a year, with firms in 192 countries around the world transacting across the network.”
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The construction industry: Facing a mental health crisis
Data collected by the Office for National Statistics has shown that more than 2,000 construction workers took their own lives in 2017. Other findings from a study conducted by the Glasgow Caledonian University show that the problem is getting worse. From 2017 to 2019, the number of suicides per 100,000 rose from 26 to 29, with people in the construction industry three times more likely to take their own lives in 2019 compared to other industries.
Why is the construction industry experiencing a rise in mental health conditions?
Bill Hill, Chief Executive of the mental health charity Lighthouse Club, says that one reason for the rise in mental health conditions is due to financial pressure. He said that it is a “huge factor” in construction, “causing stress, depression, and anxiety”. He added that several self-employed workers are “brilliant tradespeople but don’t have the education”, which may be helpful in running their business.
“They win a project, someone pays them a big invoice but they don’t put money aside for VAT [and then] the taxman asks for payment so they get finance. It tumbles from there. Sole trader-style business management should be taught at apprenticeship level”, Hill said.
According to Lighthouse Club, the industry is “hugely fragmented” and “difficult to reach over half of the 2.8mn self-employed construction workers. “Some larger companies have done a fantastic job on mental health”, Hill says. “But only apply their programmes and workshops to their own staff. Until you get to the huge mass of very capable tradespeople who are getting no input, one of the biggest problems is awareness”.
How can awareness of mental health be improved in the construction industry?
Chief Executive of the Construction Industry Council, Graham Watts, says that the industry has made positive steps forward on mental wellbeing but that “it is still not doing nearly enough” to support staff in this area.
Looking at how awareness of mental health can be improved in the industry today, Watts said: “Today, I would hope it is easier to be more open about mental health. I’m impressed by the leadership that is being shown by some companies – for example, Tideway, where Chief Executive Andy Mitchell has ‘mental health first aider’ immediately after his email sign-off – but it is still only being exhibited by the best of the best”.
Lighthouse club has also launched a campaign for construction workers to raise more awareness of mental health in the industry. Named “Help Inside the Hard Hat”, the campaign makes all workers aware of the services that Lighthouse Club offers, “regardless of employment status”, the charity says. Lighthouse Club is taking particular care to encourage contractors to put up posters on sites and ensure that they reach all workers, including the self-employed.
The charity also has a free app that allows workers to access mental health information and resources. Lighthouse Club is also improving the availability of information by working with partners such as the Safer Highways charity and Glasgow Caledonian University. But the charity is working on improving the understanding and destigmatisation of mental health in the industry one step at a time. Hill said: “The first thing is suicides,” says Hill. “That is the number one benchmark of all the work we are doing – are we reducing suicides in the industry?”.
If you are a construction worker - or someone you know is and you need support, you can call the Lighthouse Club helpline on 0345 605 1956.